NEW YORK (MainStreet)—An article appeared in The Onion yesterday with the headline "Find The Thing You’re Most Passionate About, Then Do It On Nights And Weekends For The Rest Of Your Life." The pessimistic implication here, is that people must brush aside their passions in favor of material gain and lucrative careers. But is it society's gain?
University of Chicago economics professor E. Glen Weyl says no. In fact, his paper "Taxation and the Allocation of Talent," argues that if people follow their passions, the economy benefits at large. In this edition of What's wURKen?, Weyl spells out why following your calling may make for a more robust economy in the long term.
With tax increases on the richest Americans, there are fewer financial incentives to go into historically lucrative careers like banking. As such, Weyl argues, more educated people will follow their passions and go into careers like education public service.
As for the economic benefits of having more intelligent teachers, a recent study by Raj Chetty and his co-authors found that the difference between a bad teacher and a good teacher increases the total lifetime earnings of the students in that class by more than $300,000, and that is just their earnings (good teaching also affects who people marry, etc.).
“If we have more good people teaching, our labor force will be more productive, more creative and healthier and our economy will grow faster,” Weyl said. “Similarly if we have more people going into research and entrepeneurship, we will have more innovation and more new businesses.” A progressive tax structure, Weyl argues, will spur people to follow their “calling.”
In order to demonstrate the relative earning potential people will have based on shifted tax structures, Weyl has introduced an applet to allow people to see the results for themselves and not take the Ivory Tower’s word as dogma.
“For too long economics research has been a bit like hocus pocus,” he said. “A result just pops out and sounds like it came from heaven. What we are trying to do with this applet is open it up to the public and allow people to craft their own answers to economic questions. I think that teachers are more productive than financiers, but maybe you don't. If not, put that in and the applet will tell you what you should want taxes to be, not what I, the economist, think.”